question
Why are resources limited? Why can't we get everything all the time?
answer
We can't get everything all the time because resources are finite.
question
If your business is not efficient, where will your numbers fall on the Production Possibilities Frontier?
answer
inside the curved line of the graph
question
Opportunity cost relies on a company making a choice that requires some level of what?
answer
Sacrifice
question
If a company can use 100% of its resources to produce 30 tons of timber or 5 head of cattle, which would be its best "Comparative Advantage" choice?
answer
to use 100% of its resources to produce timber
question
The Circular Flow Model includes government. What do households and firms send to the government?
answer
Tax revenue
question
A "complement" is a product consumed with other products. What happens to the Demand Curve for cookies if the price of milk increases?
answer
The demand for cookies to go with the milk will also decrease.
question
When the cost for Factors of Production (inputs) increases, Supply decreases. This means Supply will do what?
answer
shift to the left
question
Market Equilibrium is where the Supply and Demand curves intersect. What is significant about this intersection?
answer
It's where consumers and producers agree on price and quantity.
question
What are businesses within the Producer Surplus area willing to do?
answer
Produce fewer products at a lower price.
question
Which of the following is a belief of economist Adam Smith?
answer
The "Invisible Hand"
question
GDP is composed of four components. Which of the following would be considered a component of GDP?
answer
a husband buying a card to give his wife for their anniversary
question
Which of the following would fall under the category of investment for the GDP in the Circular Flow model?
answer
Buying land to expand a factory in the future.
question
In history, which of the following countries experienced hyper-inflation shortly after World War I?
answer
Germany
question
Assume a nation's Nominal GDP is $20 trillion with an inflation rate of 7%. Find its Real GDP.
answer
18 Trillion
question
The CPI is calculated by comparing the spending levels at the beginning of each year to the end of each year. In this way, the calculation is similar to what?
answer
Inflation
question
Which of the following groups is negatively affected the least by inflation?
answer
Debtors
question
Complete the following sequence of events regarding the Business Cycle: Boom, _________, Trough, Recovery.
answer
Recession
question
Frictional Unemployment is the unemployment resulting from transferring between jobs. Which of the following is an example of Frictional Unemployment?
answer
not working because you have left your previous job and your new job doesn't begin for 1 month
question
The Unemployment Rate is a report card calculated as a percentage. It divides the number of unemployed people by the working labor force. How is the number of unemployed defined?
answer
those of a working age who are seeking a job, and not working a job at that time
question
High costs are associated with high unemployment. What economic phenomena is associated with high unemployment?
answer
Economic Depression
question
In Macroeconomics, we focus on regional, national, and global economies. We also focus on issues which affect entire nations. Which of the following is a subject of Macroeconomics?
answer
Gross Domestic Product
question
The Circular Flow Diagram can be used to illustrate Aggregate Demand. Which of the following provide goods and services to households?
answer
businesses
question
Aggregate Demand is everything produced while Simple Demand is one good. Which statement reflects Aggregate Demand?
answer
calculating real output
question
What would happen to the Aggregate Demand Curve if the Feds raised the interest rates from 4% to 7%?
answer
AD1 would shift to AD2
question
If the real output is at a very high level, which of the following will occur with wages?
answer
Wages will dramatically rise.
question
With What is an increase in the Short-Run Aggregate Supply Curve associated?
answer
a shift to the right
question
According to Keynesianism, as more items are being made and prices are rising, what is happening in the economy?
answer
Resources are being fully-utilized.
question
The Classical School believes the LRAS Curve is very different from the Keynesian LRAS Curve. According to the Classicists, the LRAS Curve is only what?
answer
vertical
question
Which of the following would be seen as an improvement on the quality of capital?
answer
Research and development has improved.
question
What value is usually associated with the term " (Y)"?
answer
Real Output
question
The Long-Run Classical Macroeconomic model has a vertical Long-Run Aggregate Supply Curve. What does this mean?
answer
Prices can change, but Real Output (Y) will remain the same.
question
What type of example is this curve known for?
answer
Keynesian
question
The Marginal Propensity to Consume is how much you spend for every dollar your income increases. How much money is spent if MPC is .8 and you have a $10,000 raise?
answer
$8,000
question
The function of money "Relative Value" provides for standards with objective values. What is the final effect of this action?
answer
Increases the firm's ability to make economic decisions
question
When a baby views a $20 bill, it only sees a green piece of paper. Which of the following does this represent?
answer
intrinsic value money
question
What does the "maturity" of a debt instrument refer to?
answer
amount of time before the debt must be repaid
question
The economic principle of Time Preference states that people prefer to have something today rather than have the same thing tomorrow. What other economic principle can explain this choice?
answer
opportunity cost
question
A very strong relationship exists between the Money Supply and Prices. Which of the following describes this relationship?
answer
direct
question
Which of the following contains Repurchase Agreements (REPO)?
answer
M3
question
Which of the following will happen when there is an increase of M1 in the economy?
answer
The value of money (the dollar) will erode.
question
The US financial system has a simple structure with a central figure at the top. What is the title for this person?
answer
Chair of the Federal Reserve
question
Which of the following are short-term money market debt where the debtor often buys back their bond a day or two later?
answer
Repurchase Agreements
question
Which of the following best describes debt?
answer
an obligation to pay money back to a firm
question
What is the result of a decrease in the Supply of Loanable Funds?
answer
increase in the interest rate
question
What is the term for the percentage of a deposit that must be kept in the bank (and not loaned out)?
answer
Required Reserve Ratio
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